Understanding Misuse/ Abuse and Fraud

What are some examples of misuse/abuse?

GSA SmartPay Purchase Account misuse/ abuse can take many different forms, but here are some of the most common examples:

Purchases exceed the account holder's authorized limit. Account holders may be limited to a specific spending limit per transaction, per day, or per monthly billing cycle.

Purchases for which no funding is available. Federal law requires that funds must be available before any government purchase is made. It is up to the account holder to ensure that the funds are available prior to making any transaction.

The account holder allows other people to use his/her purchase account. Account holders must take steps to ensure the security of their account. This means the purchase account must be used only by the account holder and only for official government business. If the account holder allows others to use the purchase account, the account holder will be held personally liable to the Government for any unauthorized transactions.

Split Transactions. The FAR limits the dollar threshold for micro-purchases. Any purchase that, as a whole, would exceed the micro-purchase limit but is separated into smaller transactions in order to avoid the micro-purchase limit is considered to be a split transaction.

Products or services that do not meet the government's requirements. Account holders must use discretion when making purchases to ensure that they meet the government's requirements. Due to the wide array of products and services available, there may be occasions when account holders may be requested or tempted to buy luxury or deluxe versions of products and services that exceed the government's actual requirements. For instance, it would be questionable for an account holder to buy a $500 designer fountain pen when there are many quality fountain pens available for $50 or less.

Purchases for personal consumption. All purchases must be for official government use only. Thus, any purchase made that is for the account holder's personal use rather than for official government purposes is considered to be misuse. For example, an account holder who uses the purchase account to buy himself lunch because he had no cash available that day is misusing the purchase account.

Purchases that are not authorized by the agency/organization. Your agency/organization may have additional limits on the use of the purchase account, such as limiting certain categories or types of products or services.

Consequences for misuse/abuse may include:

Reprimand;

Purchase account cancellation;

Counseling;

Suspension of employment;

Termination of employment; and

Criminal prosecution.

Note: Some agencies have agency-specific penalties and consequences for misuse/abuse of the purchase account.

What is fraud?

Fraud is a deception deliberately practiced with the motive of securing unfair or unlawful gain. Fraud can be an attempt to cheat the Federal Government and corrupt its agents by using GSA SmartPay payment solutions for transactions not part of official government business. Like any deception, fraud has its fair share of victims.

Some of the different types of fraud include:

Counterfeit Accounts — To make fake cards, criminals use the newest technology to “skim” information contained on magnetic stripes of cards, and also to pass security features (such as holograms).

Lost or Stolen Accounts — Often physical cards are stolen from a workplace, gym or unattended vehicle.

Card Not Present (CNP) Fraud — Internet fraud occurs whenever account information is stolen and used to make online purchases. Usually, a merchant will ask for the CVC code (located on the back of the card itself) to help prevent this type of fraud.

Phishing — Phishing occurs whenever an account holder receives a fake email directing him or her to enter sensitive personal information on a phony website. The false website enables the criminal to steal information from the account holder.

Non-Receipt Fraud — This occurs whenever new or replacement cards are mailed and then stolen while in transit.

Identity Theft Fraud — Whenever a criminal applies for an account using another person’s identity and information

As an account holder, you must:

Be alert to the indicators of fraud (including false charges/ transactions, mischarging, bribes, gratuities, and kickbacks)

Report suspected fraud immediately through the proper channels at your agency (AO, A/OPC, Financial Officer, Office of the Inspector General or Office of Special Investigations)

Note: Any intentional use of the GSA SmartPay purchase account for other than official government business is considered an attempt to commit fraud against the U.S. Government and may be cause for disciplinary actions. The account holder is held personally liable to the Government for the amount of any non-Government transaction. Under 18 U.S.C. 287, misuse of the purchase account could result in fines or imprisonment or both. Military members who misuse the purchase account may be subject to court martial under 10 U.S.C. 932, UCMJ Art. 132.